President Obama wants millionaires and billionaires taxed at a rate as least as high as the one school teachers pay. That plan is among the key issues between the Administration and Republican members of Congress. The Republicans call the program “class warfare.” Obama simply says it is fair.
It would have been easier from a public relations standpoint to have kept the millionaire tax out of the president’s plan or to have buried it in the fine print. It probably will not raise much money — it is probably too complex to do so. And it is now the source of bickering among the parties that have to agree on much larger issues about how to cut the deficit and, perhaps, stimulate the jobs market.
The president did not explain how the millionaire tax plan will work. That probably is because it will be immensely complex to set, which means a higher tax may never be implemented at all. Bloomberg reports that “Constructing such a rule would be tricky because high earners aren’t the only taxpayers benefiting from breaks; many middle-income families use deductions, credits and exemptions to drive their rates below the 17.4 percent that Buffett says he pays.” Treasury Secretary Tim Geithner says the Administration will issue details, but not until the rest of the points of the president’s tax plans are set. In other words, the promise of the tax hike is there, but that does not mean much without specifics.
The new proposal would decrease the deficit by $3.6 trillion between now and 2020. A possible elimination of some of the Bush tax cuts would be part of the reduction. So would plans to close corporate tax loopholes. Medicare cost reductions are a large component of deficit reduction. So are lower costs for the wars in Iraq and Afghanistan. Taken together, these items must be greater than more taxes taken from Americans who make over $1 billion a year.
The millionaire tax program might have been tucked into other changes in the code, and as such the tax might have been included in a final program accepted by both parties. But, once the millionaire tax plan was pushed in the faces of the Republicans, it became the single most important point of public contention in what is a much, much larger debate.
Douglas A. McIntyre